For a few years, software had two things that private equity firms coveted: brisk growth and inert customers who tended to sign up and stay put. Buyout firms piled in. But the so-called SaaSpocalypse — which reached fever pitch last week as investors offloaded shares in companies that sell software as a service — has called the wisdom of that trade into question.
Despite its historical penchant for bricks and mortar, private equity — and indeed the private capital sector more broadly — embraced the software sector with alacrity. Between 2020 and the first half of 2025, roughly a fifth of all buyouts in North America were tech deals, according to Bain & Co. US-listed private credit funds known as business development companies have a similar exposure to software-related debt, PitchBook estimates.
For some companies, the sell-off in recent weeks reflects nebulous fears of AI disruption rather than actual present-day profitability problems. Shares in customer-relations giant ServiceNow have fallen almost one-third this year, despite it producing better fourth-quarter results than it had previously predicted. Project management software maker Monday.com’s shares fell more than 20 per cent on Monday when the group issued its 2026 guidance, despite it forecasting 18 to 19 per cent revenue growth.